Cadence Design Systems (CDNS)

Any person who is employed at least twenty (20) hours per
week and five months per calendar year by Cadence, or any parent
or subsidiary of Cadence designated by the Board, is eligible to
participate in an offering if the employee was employed by
Cadence or a designated affiliate on the fifteenth (15th) day of
the month before the first day of the offering period.
Approximately 90% of Cadences and its subsidiaries
employees, including all of Cadences executive officers,
are eligible to participate in the Employee Plan. However,
employees of certain international Cadence subsidiaries are not
eligible to participate in the Employee Plan because of local
tax or regulatory issues or other considerations. Cadences
non-employee directors are not eligible to participate in the
Employee Plan.

No employee is eligible to participate in the Employee Plan if,
immediately after the grant of purchase rights, the employee
would, directly or indirectly, own stock or hold options
possessing 5% or more of the total combined voting power or
value of all classes of stock of Cadence or of any Cadence
parent or subsidiary, including any stock which the employee may
purchase under outstanding rights and options. In addition, as
required by Section 423 of the Code, no employee may accrue
the right to purchase shares under the Employee Plan at a rate
that exceeds $25,000 worth of common stock (determined at the
fair market value of the shares at the time the right is
granted, which fair market value is based upon the closing price
of the shares) for each calendar year in which such right is
outstanding at any time.

Rights granted in any offering under the Employee Plan terminate
immediately upon cessation of an employees employment for
any reason, and Cadence will distribute to a terminated employee
all of his or her accumulated payroll deductions, without
interest.

Any person who is employed at least 20 hours per week and
five months per calendar year by Cadence, or any parent or
subsidiary of Cadence designated by the Board, is eligible to
participate in an offering if the employee was employed by
Cadence or the designated affiliate on the 15th day of the
month before the first day of the offering period. Almost all of
Cadences and its subsidiaries approximately
5,300 employees, including all of Cadences executive
officers, are eligible to participate in the Employee Plan.
However, employees of certain international Cadence subsidiaries
are not eligible to participate in the Employee Plan because of
local tax or regulatory issues. Cadences non-employee
directors are not eligible to participate in the Employee Plan.

No employee is eligible to participate in the Employee Plan if,
immediately after the grant of purchase rights, the employee
would, directly or indirectly, own stock or hold options
possessing 5% or more of the total combined voting power or
value of all classes of stock of Cadence or of any Cadence
parent or subsidiary, including any stock which the employee may
purchase under outstanding rights and options. In addition, no
employee may accrue the right to purchase shares under the
Employee Plan at a rate that exceeds $25,000 worth of common
stock (determined at the fair market value of the shares at the
time the right is granted, which fair market value is based upon
the closing price of the shares) for each calendar year in which
such right is outstanding at any time.

Rights granted in any offering under the Employee Plan terminate
immediately upon cessation of an employees employment for
any reason, and Cadence will distribute to a terminated employee
all of his or her accumulated payroll deductions, without
interest.

Incentive stock options may be granted under the 1987 Plan only
to Cadence employees or employees of its affiliates. Employees
of Cadence and its affiliates (including officers and directors
who are also Cadence employees or employees of its affiliates)
and consultants are eligible to receive nonstatutory stock
options and incentive stock awards under the 1987 Plan. No
incentive stock option may be granted under the 1987 Plan to any
person who, at the time of the grant, owns (or is deemed to own)
stock possessing more than 10% of the total combined voting
power of Cadence or any of its affiliates, such person being
referred to below as a 10% stockholder, unless the option
exercise price is at least 110% of the fair market value of the
common stock subject to the option on the grant date, and the
term of the option does not exceed five years from the grant
date. In addition, the aggregate fair market value, determined
at the time of grant, of the shares of common stock with respect
to which incentive stock options are exercisable for the first
time by an optionee during any calendar year, under all other
plans of Cadence and its affiliates, may not exceed $100,000.

No person may be granted awards under the 1987 Plan covering
more than an aggregate of 2,216,702 shares of common stock
in any calendar year.

Almost all of Cadences and its subsidiaries
approximately 5,200 employees, including Cadences six
executive officers, are eligible to receive awards under the
1987 Plan. Non-employee directors are not eligible to receive
awards under the 1987 Plan.